Four Horsemen of Retirement

The Four Horsemen of Retirement – Part II

This is part two of a three-part series entitled, “The Four Horseman of Retirement”. In part one we introduced you to the Four Horsemen and briefly touched on how they can each trample your retirement. Today, we will be conducting a deeper dive on each of the Horsemen and offer some considerations on how you can defend your retirement plan from these menaces.



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Retirement planning investment management

The White Horseman

Today people have a much longer life expectancy than their parents or grandparents did. The White Horseman counts on you to underprepare, thus leaving him room to strike. Many retirement advisors still create their plans based on a 30-year retirement. However, 30 years is now considered too short of a time period for many. Sound outlandish? Imagine a couple retiring in their late 50s or early 60s. According to the Social Security Administration, by the time they’re 65 years-old, the couple has about a 50/50 chance that one of them will live until age 90, about a 1-in-3 chance one will live until 95 and about a 10% one will live until age 100. Further, this is data from 2005 and the odds have since increased that we will live even longer. Below are some strategies that may help you avoid running out of money later in life:

  • Use a sustainable withdrawal rate, which is the annual percentage of your nest egg that you can withdraw each year without depleting your assets
  • Maximize your Social Security benefits
  • Have guaranteed income streams (i.e. annuities and pensions)
Retirement planning financial planning

The Red Horseman

The devious Red Horseman likes to first tempt retirees with exotic vacations, fine dining and material items. He will whisper in your ear not to worry, assuring you that you will get better-than-expected investment returns that will make up for your unplanned splurges. If you should hold strong, he will turn up the pressure with unexpected home repairs or medical procedures. Last, if all else fails, he will pull on your heart strings with loved ones requesting financial help for tuition or that first home purchase. Knowing yourself and your limits is the best armor against this Horseman.  Consider the suggestions below:

  • Make decision rules for certain spending choices (e.g. charitable contributions)
  • Prioritize your goals and values
  • Conduct financial planning for important life events
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The Black Horseman

This Horseman is often subtle, slowly robbing you of your purchasing power as the years tick by. The next thing you know, you are left feeling like your $100 does not go nearly as far as it used to.  And, you would be right. For example, to match the purchasing power of $100 in the year 2000, you would now need $153 in the year 2020. Ouch! And that 20-year period is considered a relatively tame period of inflation. Be aware, you are particularly vulnerable to the Black Horseman if you have a pension or annuity that does not provide an inflation adjustment (many do not). Consider the tips below to side-step this sneaky Horseman:

  • Diversify your assets and income streams
  • Maintain minimal exposure to low-yielding, long-term fixed income assets
  • Ensure you have a proper allocation to equities
Retirement planning and saving for retirement

The Pale Horseman

Be prepared for the Pale Horseman, as he is known to ruin the best laid plans and be particularly savage to the overly optimistic investor. He raids your finances by delivering a sequence of poor returns to your portfolio, which he prefers to do right as you are retiring. His goal is to inflict a mortal wound on your retirement income plan, ensuring your nest egg becomes depleted beyond recovery. The old saying, “An ounce of prevention is worth a pound of cure” rings most true to keep this Horseman at bay. Consider the following defenses below: 

  • Have an appropriate asset allocation for a decumulation portfolio
  • Understand your access to guaranteed income streams (e.g. Social Security)
  • Have a retirement income plan that allows for flexible spending   


Plan Now to Avoid the Four Horsemen

Knowing the biggest risks to your long-term financial health in retirement is critical.  The Four Horsemen are out there.  Act now to keep them from ultimately trampling what could otherwise be an enjoyable and productive retirement.



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Picture of Jeff Rotherham, CFP®, MSAFP

Jeff Rotherham, CFP®, MSAFP

Jefferson Rotherham is a Certified Financial Planner® and Orion's Director of Financial Planning. Over the course of his career, Jefferson has developed and monitored hundreds of financial plans for clients in a wide range of circumstances. Prior to embarking on his career in financial planning, Jefferson served in the U.S. Navy for 20 years.

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